Www.marylandattorneygeneral.gov
Buying a Janitorial Services Franchise
1
Contents
HOW JANITORIAL SERVICES FRANCHISES WORK 4 PROBLEMS YOU MAY FACE 5 THE FTCS FRANCHISE RULE 12 PROTECT YOURSELF 13 FOR MORE INFORMATION 17 GLOSSARY OF TERMS 18
2
f you're thinking about starting your own business and have only a small amount to invest, you may be considering buying a janitorial services franchise. For a fee, a janitorial service company (the "franchisor") typically provides you (the "franchisee") with customers and marketing, billing and collection services.
Every franchisor has success stories to share. Be cautious. While success in the janitorial service industry is possible, it's not a guarantee.
A glossary of terms commonly used in the franchise industry is included at the end of this brochure.
3
HOW JANITORIAL SERVICES FRANCHISES WORK
In a typical janitorial cleaning franchise, you pay the franchisor a fee for a "package" of cleaning accounts. The fee is based on the dollar value of cleaning accounts that the franchisor will make available. The fee usually is about half the gross income the accounts are supposed to generate in a year. For example, for a fee of $10,000, you'll get accounts worth $20,000; for a fee of $15,000, you'll get accounts worth $30,000. You also may have to pay ongoing royalty or management fees.
The franchisor may offer you financing. This may sound especially attractive if you have trouble getting credit from traditional lenders.
The franchisor is supposed to offer you cleaning accounts that will produce the level of income represented in the package you purchased. However, several factors can affect that level of income. For example, if you don't accept an account, the franchisor may not have to offer you a substitute. Or, if you refuse an account because you feel it's located too far away, you may lose your right to that income. Also, if you lose accounts because you did a poor cleaning job,
4
the franchisor doesn't have to replace those accounts.
PROBLEMS YOU MAY FACE
The Federal Trade Commission
and the Maryland Attorney General's
Office advise you to use caution when
thinking about buying a janitorial
services franchise,
which often appeal
to immigrants and others who speak limited English. The franchise agreement
Z
you'll receive from
the franchisor may be long and complex. It may be difficult to under-
Z
stand your legal
rights and obliga-
tions, and the
obligations of the
franchisor. Consider getting
professional advice. Ask a
lawyer, accountant or
business advisor to review
the franchise agreement.
The money and time you spend on
professional help may save you from a
bad investment.
5
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.